Archive for category Daily Service

Gross Sues Pimco for “hundreds of millions” for Wrongful Termination

Yahoo Finance article by Mary Childs

billBill Gross sued Pacific Investment Management Co. and parent Allianz SE for “hundreds of millions of dollars,” claiming he was wrongfully pushed out as the bond giant’s chief investment officer by a “cabal” of executives seeking a bigger slice of the bonus pool.

“Driven by a lust for power, greed, and a desire to improve their own financial position and reputation at the expense of investors and decency, a cabal of Pimco managing directors plotted to drive founder Bill Gross out of Pimco in order to take, without compensation, Gross’s percentage ownership in the profitability of Pimco,” according to a copy of the complaint seen by Bloomberg. The complaint alleges that Pimco executives’ “improper, dishonest, and unethical behavior must now be exposed.”

The complaint’s filing in California State court couldn’t be immediately confirmed in court records. Michael Reid, a spokesman for Pimco, declined to comment.

The complaint presents a detailed account of the events leading up to Gross’s departure on Sept. 26 last year, a move that rattled bond markets and prompted record redemptions at what once was the world’s largest mutual fund. It portrays Gross as an advocate for lower fees and traditional, lower-risk bond investments who was pushed out gradually by other executives seeking to expand into riskier assets and higher-fee products.

Gross, 71, claims the Newport Beach, California-based firm owes him at least “hundreds of millions” for wrongful termination, breach of written contract, and breach of covenant of good faith and fair dealing, according to the document.

Gross was expecting a bonus of about $250 million for 2014, with most of that due in the second half of the year, according to the lawsuit. Because he left the firm days before the third quarter ended, Pimco refused to pay him a proportionate amount, said the complaint, which claims that his termination resulted in damages to Gross of no less than $200 million.

Gross, who is worth $2 billion according to theBloomberg Billionaires index, says he wouldn’t keep money he might recover in a lawsuit. Patricia Glaser, Gross’s lead attorney, said in an e-mail that all proceeds from the lawsuit would go to charity, including the Pimco Foundation.

At its height in 2013, Pimco oversaw about $2 trillion in assets. It’s since shrunk to $1.5 trillion. The Pimco Total Return Fund, which Gross oversaw since inception in 1987 until his departure, now has $95.5 billion of assets under management, about a third of what it had at its peak.

Gross is now running the $1.38 billion Janus Global Unconstrained Bond Fund for Janus Capital Group Inc., which has lost 1.9 percent in the past year, according to data compiled by Bloomberg. That performance puts him in the middle of the pack, trailing 51 percent of unconstrained funds.


Posted by:  The Trust Advisor



No Comments

What’s Up With This Buy Back?

Market Watch article by Tomi Kilgore

HP_HeadquartersHow would you feel if the company that just laid you off said it was spending millions of dollars, or even billions, to buy back its stock?

At least you wouldn’t feel lonely.

U.S. companies announced 205,759 job cuts during the third quarter, the most since the third quarter of 2009, just after the Great Recession, according to data provided by outplacement company Challenger, Gray & Christmas Inc. In September, the number of announced job cuts was nearly double what it was at the same time last year.

On Friday, the Labor Department released a stinker of a September jobs report.

At the same time, share repurchases announced by U.S. companies during the third quarter remains around the highest levels in at least the last decade, according to data provider Dealogic Ltd. In September, companies authorized buybacks totaling $243.4 billion, more than seven times the amount announced in the same month a year ago, Dealogic said.

One might think these corporate actions are mutually exclusive, but as the chart above shows, many companies are doing both. In fact, some companies have even announced job cuts and share buybacks in the same news release.

Hewlett-Packard Co. made the biggest job-cut announcement this year, according to Challenger, on Sept. 15, when it said it was laying off up to 30,000 people. In the same statement, it indicated it could spend $700 million on share repurchases in fiscal 2016. H-P declined to comment.

Late Thursday, Bebe Stores Inc.  said in a statement that it will lay off over 50 employees, or nearly 2% of its workforce, to save about $4.8 million a year. In the next paragraph, Bebe said it authorized a $5 million share repurchase program, which at current prices represents nearly 6% of the shares outstanding. The women’s apparel and accessories retailer did not respond to a call for comment.

Industry expects said that often times, money used for stock buybacks comes from retained earnings—saved from the past—while layoffs reflect concerns about the future outlook for growth. When times are tough, however, it’s a different story.

“Whenever a company is laying off employees, something is not going the way it wanted it to,” said Dr. Michael McDonald, a professor at Fairfield University’s Dolan School of Business, in a phone interview with MarketWatch.

When a company is buying back stock and laying people off as its share price is falling, it could be viewed as “defensive” move, he said.

H-P’s stock has tumbled 35% year to date and Bebe’s has plunged 52%. That compares with a 5.2% slide in the S&P 500 index.

“It’s an effort to keep the stock price from falling too much. If the stock price keeps falling, it cuts off the company’s ability to raise capital in the future,” McDonald said. “Shareholders could be taking a little bit of solace that they are trying something.”

When H-P made its announcement after the Sept. 15 market close, the stock jumped 5% the next day, before falling for the next eight sessions. After Bebe’s announcement late Thursday, the stock surged and was up 7.5% on Friday, to close above the $1 mark for the first time since Sept. 24.


Posted by:  The Trust Advisor



No Comments

Jobs Report Is Underwhelming, To Say The Least

NY Times article by Patricia Cohen

unemployementlineEmployers added a mere 142,000 jobs in September, the government said Friday, casting a shadow on the nation’s economy in a Labor Department report that analysts variously described as “dreadful,” “a body blow” and “grim.”

Adding to the gloom, the agency revised August’s employment numbers sharply downward, showing that only 136,000 jobs were created that month, well below the 173,000 originally estimated. The two consecutive weak reports pointed to a loss of momentum for the American economy over the summer.

The unemployment rate held steady at 5.1 percent, but hourly wages for private-sector workers actually fell slightly last month, suggesting that ordinary workers are still failing to take home any meaningful benefits from a recovery that has being going on for more than six years.

The newest report came just two weeks after the Federal Reserve decided that the economy’s advance was still too fragile to risk lifting interest rates from their near-zero level, even as it hinted that it might go ahead by December. Now, experts said, the latest evidence of a slowdown may well push any rise into next year.

“Unfortunately, today’s report will not give much reassurance to Fed policy makers,” said Andrew Chamberlain, chief economist at Glassdoor Economic Research.

Although stocks fell right after the announcement, by midday most of the losses had been reversed; the yield on the benchmark 10-year Treasury bond dipped below 2 percent.

“There’s nothing good in this morning’s report,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago. “We had very low levels of job creation, wage growth isn’t budging and the unemployment rate would have risen if the labor force participation rate hadn’t fallen.”

The participation rate dipped to 62.4 percent from 62.6 percent, a sign that workers who were sidelined during the recession are still not being enticed back into the job market.

Mr. Tannenbaum said he worried that the United States was now importing some of the economic malaise that has infected other parts of the world, particularly China and Europe.

The manufacturing industry has been hurt by the strong dollar and weak global demand; the oil industry has cut back sharply on investment in response to the sharp fall in energy prices; and farming has suffered because of slumping agricultural commodity prices.

The industries that absorbed the greatest losses were mining, logging and manufacturing, while health care, leisure and hospitality, and professional and business services remained strong. There were also 24,000 new government jobs created, mostly at the local level.

With Friday’s revision, job gains have averaged just 167,000 a month for the last three months, compared with more than 200,000 over the previous 12 months. The average length of the workweek dipped slightly.

There have, however, been other recent signs of sturdiness in the economy to counter the discouraging news on the jobs front. Consumer demand at home has been on the upswing and vehicle sales have been strong. And wage growth for August was revised upward to a gain of 0.4 percent in hourly pay for private-sector workers.

“Against the backdrop of accelerating real consumption, it’s hard to see what’s driving this softening and what could sustain it,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, sounding a more optimistic note. “We have to expect better numbers next month, and the odds still strongly favor upward revisions, despite the unexpected downward revision to August.”

The economic outlook varies markedly depending on geography, training and industry.

Looking at the feeble yearly rise in median wages, Mr. Chamberlain at Glassdoor pointed out that such figures mask a wide disparity among industries. Many workers in financial services, construction and graphic design, for example, have enjoyed double-digit wage growth from the previous year. Those suffering some of the steepest wage declines included those in the manufacturing, retail clothing and textile industries.

The demand for young, high-technology workers has also been evident to Isaac Oates, the chief executive of Justworks, a human resources management company that handles mostly small businesses. “We see that a lot of companies are growing quickly,” he said.

Other industries, like travel and leisure, where automation cannot easily substitute for the type of work servers and housekeepers do, have also proved more resilient job creators, even if wages haven’t grown much. The number of unemployed workers with construction experience also dropped to its lowest level since 2000, the Associated General Contractors of America reported on Friday.

The outlook is much worse for those in the low-skill corners of the economy.

“We’re still finding a lot of skilled jobs come open, but it’s certainly slowed down for the unskilled,” said Robert A. Funk, chairman and chief executive of Express Employment Professionals, a staffing agency based in Oklahoma City with 750 offices.

Skilled workers are at a premium at Advanced Technology Services, a manufacturing consulting company based in Peoria, Ill. Jeff Owens, the president, said he would like to add about 160 workers to his 3,300-person staff.

“Where we’re struggling is in the area of talented people in manufacturing,” he said, mentioning managers and skilled electricians, information technology workers and machinists.

Location also matters. Mr. Funk, a former chairman of the Federal Reserve Bank of Kansas City, said he noticed a slowing down in the last six weeks, with the biggest drop-offs in the oil-drilling states, including Texas, Oklahoma and North and South Dakota.

Tom Gimbel, chief executive of LaSalle Network, a Chicago staffing firm, said he had noticed a recent wariness among employers, who have been unsettled by the Fed’s uncertainty as well as by changes in regulations governing overtime exemptions and compensation. “What I’m seeing with companies is that they’re taking a little bit longer to hire,” he said. “Companies are just trying to figure how it’s all going to play out.”

Diane Swonk, chief economist at Mesirow Financial, was more pessimistic, calling the latest employment figures a “body blow to the economy” and a sign that growth would be subpar in the third quarter.

She said it was more likely now that the Federal Reserve would delay its decision to raise interest rates. She said that the Fed chairwoman, Janet L. Yellen, has “really made it clear that she’d like to re-engage those sidelined in recent years by allowing the unemployment rate to fall below what most consider full employment.”

“It’s the only way we’re going to regain living standards lost in recent years,” she added.

Others fear that the economy is never going to deliver many gains to workers who have been waiting years to receive any bounty from the improvements in growth.

William Spriggs, chief economist for the A.F.L.-C.I.O., said: “We’ve pretty much reached a kind of stability, and the unemployment rate will continue to fall, mostly because of retirements.”

An analysis this week from Morgan Stanley noted that the decline in the unemployment rate to 5.1 percent in August, from 5.5 percent in May, was almost entirely attributable to a drop in the labor force participation rate. The percentage of the working-age population that is employed — which some economists consider a bellwether of how the economy is performing — has for most of this year stayed flat at under 60 percent, significantly below its prerecession levels.

The disheartening jobs report puts the economy squarely at the center of the political debate. As the presidential race heats up, Republicans are likely to resume their attacks on the Democrats and President Obama’s economic record.

The administration’s labor secretary, Thomas Perez, criticized Republicans in Congress for creating “self-induced headwinds” that hurt the economy, citing opposition to the Export-Import Bank and a transportation infrastructure bill, as well as automatic budget cuts that occur in the absence of a longer-term budget agreement.

While public-sector jobs did pick up in September, thanks to hiring by local governments, employment of teachers and other civil servants has not made up the lost ground, said Elise Gould, a senior economist at the Economic Policy Institute, a labor-oriented research organization in Washington.

“The number of teachers and education staff fell dramatically during the recession,” Ms. Gould said, “and has failed to recover to anywhere near its prerecession level, let alone the level that would be required to keep up with an expanding student population.”


Posted by:  The Trust Advisor



No Comments

See The New Liquidity Accounts From Capital Advisors Group

Article By Business Wire

moneymarketCapital Advisors Group today announced it will offer a new short-term cash investment vehicle – Capital Advisors Group Liquidity Accounts™– for investors considering alternatives to institutional prime money market funds.

Designed to provide safety of principal, short-term liquidity, and control through portfolios of directly owned securities, Capital Advisors Group Liquidity Accounts™ are a response to SEC regulations that will change the risk and liquidity profiles of institutional prime money funds starting in October 2016.

“We are entering a new era in cash management,” said Ben Campbell, CEO of the Boston-based investment advisory firm. “Capital Advisors Group Liquidity Accounts™ will help meet the emerging need for innovative cash and cash-equivalent investment vehicles that provide the safety, liquidity, transparency and control that corporate treasuries require.”

The new SEC rules will fundamentally change prime money funds by instituting floating net asset values (NAVs), meaning investors can no longer always be certain that the traditional fixed price of $1/share will be maintained in times of economic stress. Other changes – including possible imposition of redemption fees and liquidity gates when a fund’s liquid balances fall below certain thresholds – will have the potential to limit investors’ immediate access to cash as well.

Unlike money market funds, where investors own shares of pooled assets, Capital Advisors Group Liquidity Accounts™ are portfolios of investments owned directly by the client and managed by Capital Advisors Group. Client ownership and control mitigates the commingled shareholder liquidity risk associated with institutional prime money funds. An investment policy specifying eligible investments and minimum overnight and seven-day liquidity targets helps to provide safety of principal with access to cash.

Capital Advisors Group will introduce the first product in its new Liquidity Accounts™ family, a 90-Day Liquidity Account™, in November 2015. A buy-and-hold separate-account portfolio of highly rated U.S. dollar-denominated money market instruments, the 90-Day Liquidity Account™ will feature 90-day maximum maturity and 35-day target weighted average maturity of holdings, with minimums of 10 percent of holdings available for overnight cash redemption and 30 percent available in seven days.

“Our 90-Day Liquidity Account™ will be an easy, attractive option for institutional investors ready to evaluate alternatives to prime money funds and traditional bank deposits,” Campbell said. “Clients may also benefit from our proven research, trading, and credit management teams who provide transparent portfolio management, online access to account holdings and seamless monthly accounting reports.”


Posted by:  The Trust Advisor


No Comments

7 Tips On Planning Your Estate, From The Mistakes of Celebrities

Cheat Sheet article by Megan Elliott

estateplanningDrafting a will might seem like an activity for a wizened billionaire, but putting together an estate plan is actually a critical part of almost everyone’s financial plan, even those who aren’t super-rich. Yet estate planning is also a task that many people, especially young people, ignore, since death or incapacity seems like such a distant possibility. That’s a mistake, say experts.

“No one is invincible, and accidents can happen. It’s important to prepare for these situations, no matter how remote the possibility may be,” Kirsten Waldrop, associate professor of estate planning and taxation at the College for Financial Planning told Financial Planning. “Many people believe that, if they’re young and do not have a lot of money, they don’t need an estate plan. That is simply not true.” 

Perhaps there’s no better way to get an idea of the importance of having a will and other estate planning documents in place than looking at what happens after celebrities pass away. All too often, the news of a famous person’s death is quickly followed by reports of squabbling among family members, money lost to taxes, and worse.

The rich and famous usually have more complicated financial situations than the average person. Most of us aren’t going to have to worry about who inherits our personality rights after we’re gone (an issue the family of Jimi Hendrix has argued about) or who should receive our residuals. But we can still learn lessons from how deceased celebs handled their estates. Here are seven of the most important.

1. Heath Ledger

Heath Ledger had a will when he died in 2008, which left everything to his parents and sisters. Ledger also had a young daughter, but he had not updated his will to include her. His family ultimately decided that she would receive the entire inheritance, but if they had not, she may have been left with nothing from her father’s estate.

Lesson: Updating your estate plan after major life events like the birth of a child is essential.

2. Paul Walker

Paul Walker died far too soon, leaving behind a teenage daughter, his parents, and many stunned fans. But the 40-year-old actor had taken steps to prepare for the worst. He had a will and had set up a trust for his child, who inherited all of his $25 million in assets. Though Walker was relatively young, he had smartly taken steps to protect those closest to him.

Lesson: “[L]ife does not always work out the way we expect,” wrote Stephen C. Hartnett, the associate director of education for the American Academy of Estate Planning Attorneys. “Walker was wise in that he had thought ahead and had done an estate plan.”

3. Warren Burger

You’d think a Supreme Court Justice would know better than to take a do-it-yourself approach to estate planning, but apparently not. Chief Justice Warren Burger wrote his own will, but the brief document contained misspellings and oversights that may have cost his heirs hundreds of thousands of dollars.

Lesson: Do-it-yourself estate planning can backfire. Burger’s self-written will was valid, but other people may not be so lucky. Handwritten or videotaped wills or those that aren’t properly witnessed may not be recognized, and if you make a mistake, the entire will may be useless.

“Many people think an invalid will still influence(s) where your assets go, but it doesn’t,” estate planning attorney Kristi Mathisen told Bankrate. “If you have an invalid will because of a failure in the execution of the document, your state’s law of intestate succession steps in.” Protect your heirs and hire a lawyer.

4. Lou Reed

Former Velvet Underground frontman Lou Reed died in 2013, leaving his $30 million fortune to his wife and his sister. He had no children and a small family, which meant that he was able to keep his estate plan simple and straightforward. But because he had a will and not a trust, the details of estate became public, including how much money he had and who received it, when the will was filed in probate court.

Lesson: If you want to keep family business and finances private, don’t rely on a will alone.

5. Philip Seymour Hoffman

Oscar-winner Philip Seymour Hoffman didn’t want his three children to be “trust-fund kids.” To avoid that possibility – and against the advice of his lawyers — he left his entire estate to his long-time girlfriend Mimi O’Donnell, with the idea that she would provide financially for their kids. But because O’Donnell and Hoffman weren’t married, she was hit with an estate tax on the inheritance. And while Hoffman obviously trusted his partner to do right by their children, there’s no guarantee that she’ll make the same decisions he would have, as estate planning attorney Melissa Montgomery-Fitzsimmons explained in an article for MarketWatch.

Lesson: Estate tax is only an issue for people with more than $5.43 million in assets, but anyone with kids should think about how they would want them provided for. Setting up trusts with restrictions (such as that the funds be used only for education) can be a way to provide for kids without spoiling them.

6. Tom Clancy

Best-selling author Tom Clancy left behind $86 million when he died in 2013 at age 66, as well as a complex family situation. Some of his wealth went to his current wife and their minor daughter, while the rest went to four adult kids from a previous marriage. But unclear planning documents lead to a dispute over who should have to pay taxes on the estate.

Lesson: Clancy’s estate was uncommonly large, but his family situation wasn’t unusual. When relationships between heirs are complicated, crystal-clear instructions can help avoid conflict. “It’s critically important … that planning documents, regardless of if the family is blended, be drafted with as much clarity and attention to detail as possible in anticipation of such squabbling,” says

7. James Gandolfini

After he died in 2013, some who saw James Gandolfini’s will wondered whether the Sopranos star had ignored estate taxes and disinherited his eldest son. Neither was true, his lawyer told the New York Times. Yet other experts pointed out that sloppy and incomplete planning might lead to confusion or problems for his heirs, especially when it came to his home in Italy, which he left to his children, but without any specific provisions for its upkeep.

Lesson: A half-finished approach to estate planning could cause problems for your heirs and may mean that your wishes aren’t carried out exactly as you intend. Also, if you have property you want to keep in the family (like a beloved cabin), making provisions for maintenance can reduce conflict and make life easier for your survivors.


Posted by:  The Trust Advisor


, ,

No Comments

What Happened to Putting Your Money in a Trust?

Millionaire Corner article by Ed Meek

Putting_money_into_a_piggybankThere is a stark contrast between the number of wealthy Americans today and the number of personal trust accounts, which is where wealthy investors previously placed their funds in search of long-term safety and control over their assets.

Spectrem’s annual Perspective, the 2015 Personal Trust Update, provides the most detailed look at the personal trust industry in the United States. Using Spectrem insights and data from FDIC surveys of member trust institutions, the 2015 Personal Trust Update includes information on the companies who hold the most personal trust accounts, common and collective funds and fiduciary income.

For the fourth year in a row, personal trust assets grew in 2014, reaching $978.4 billion, an increase of almost $30 billion from 2013. The total has increased almost $130 billion since 2011, and continues to approach the record amount of $1.149 trillion in 2007, just before the stock market crash and recession.

However, what continues to drop is the number of personal trust accounts. For the sixth consecutive year, the total number of accounts dropped, this time to only 614,172. The decrease was slight, just over 600, but the market has lost 175,000 accounts since 2008.

The decrease in the number of personal trust accounts is surprising given the rise in the number of affluent people in the United States today. The number of wealthy households increased across the board in 2014, continuing a six-year increase, with more than 10 million households in the United States with more than $1 million or more in net worth. There are now more than 1.25 million investors with more than $5 million of net worth.

The distribution of trusts has changed slightly from last year. Whereas more than 60 percent of trusts were held by the top 10 companies, the 2014 figure showed that only 58.5 percent were held by those largest companies. Likewise, the percentage held by the top 26 companies has dropped from almost exactly 80 percent to just 77.2 percent.

According to Spectrem’s quarterly wealth segmentation series report Asset Allocation, Portfolios and Primary Providers, 49 percent of Ultra High Net Worth investors with a net worth between $5 million and $25 million have assets in a trust.

Interestingly, only 6 percent of UHNW investors have their trust assets using a financial institution as trustee. Of the others, 28 percent said their primary financial advisor told them to self-trustee, and 27 percent said using a financial institution as trustee was too expensive.


Posted by:  The Trust Advisor


No Comments

Does Austin Have 9000 Sugar Daddies?

CNBC article by Mark Fahey

sugar_daddySeekingArrangement, a site that facilitates the matching of attractive young “sugar babies” with richer “sugar daddies,” recently released a study claiming that Austin, Texas, is the “sugar daddy capital” of North America.

“All of our women are absolutely gorgeous and looking for a special sugar daddy just like you,” according to the company’s Austin site. “The average sugar baby is a beautiful, ambitious college student, aspiring actress or model, or single mom.”

Supposedly, there are 23 sugar daddies actively seeking sugar babies for every 1,000 adult males in Austin. The Big Crunch finds this figure suspiciously high—and frankly, we would be very surprised if it was accurate given the city’s demographic realities.

There are about 400,000 adult males in the city, according to thelatest Census data, so if SeekingArrangement’s numbers are right, there are more than 9,000 sugar daddies living in Austin (a calculation the company confirmed).

Already, that number means that one in every 50 men you see is a sugar daddy, but it becomes even more outlandish if you consider the income necessary to maintain a sugar baby.

The claim is hard to believe, especially considering that Austin reportedly came in 10th place in the list of top sugar daddy cities in last year’s report. At the time, there were only about eight sugar daddies per 1,000 men (sugar baby signup at the University of Texas at Austin has also boomed, according to past company data releases).

According to the study, the average sugar daddy spends more than $51,000 a year on his sugar babies and has a net worth of $5.2 million. Net worth doesn’t necessarily tell us much, especially considering that for high net-worth households, 30 to 60 percent of assets tend to be tied up in homes. Most people are unlikely to hand those off to a sugar baby as monthly payments.

So it’s income we really want, and the average sugar daddy makes about $254,000 a year, according to SeekingArrangement.

Distribution data shared by SeekingArrangement with the Big Crunch shows a much lower median income, but it’s still more than double the median income in Austin. It begs the question of who could possibly be seeking all that sugar?

According to the distribution data, about 52 percent of active SeekingArrangement sugar daddies make over $150,000. Yet only 13 percent of households in Austin make that amount or more.

Even if we make the questionable assumption that all those households include a man who could pay for a sugar baby (some, of course, are controlled by women), that’s an incredibly small pool for such a large number of sugar daddies. In fact, that’s only about 47,000 people (assuming dependents can’t afford sugar babies).

If Austin follows the national distribution and SeekingArrangement’s numbers are right, that means that 10 percent of that small group of rich folks have decided to become sugar daddies. So if you walk down the street in Austin and see 10 rich guys, at least one is probably a sugar daddy.

That seems implausibly high—and even the original one in 50 number seems unlikely to the Big Crunch—but SeekingArrangement stands by the data.

“It is surprising, but all we can really do is report what the data says,” said spokeswoman Angela Bermudo. “It is the actual number, but you have to take into consideration what people put as their income and what people put as their net worth.”

That is one way to explain the discrepancy between the number of high-income sugar daddies looking for love in Austin and the common-sense reaction that there couldn’t possibly be so many. Only “diamond members” have their incomes verified, while others may have strong incentives to exaggerate their income on their profiles.

Austin residents could also benefit from lower sugar baby costs that widen the number of people who can afford to be sugar daddies. On average, users spend $4,252 a month on sugar baby arrangements, but Austin users pay an average of $3,127 a month. That is much less than the averages of more than $5,000 a month in places like New York and Los Angeles.

Not to fear, though. According to the Austin site, “there’s no nice way to put this: some of the sugar babies in Austin, Texas, on other sugar daddy sites look a bit rough. Our sugar daddy site offers you nothing but the best of the best.”

But even if we ignored income entirely and only looked at the total number of users, the idea that sugar daddies could make up 2 percent of Austin’s male population is hard to swallow.

Two percent doesn’t seem like a lot, but in population terms it is. That figure is more than the percentage of the population working as doctors, lawyers and primary and elementary school teachers combined. If you’ve ever met someone in one of those professions, you’d have any even greater chance of meeting a sugar daddy in Austin, if these numbers are right.

There is no reason to think the high sugar daddy numbers are caused by users’ creating multiple accounts, said Bermudo. But what about something more sinister? Ashley Madison was recently accused of using imaginary bot members to fill out its female membership.

“It’s a dirty little secret in the industry,” said Bermudo of Ashley Madison’s alleged fake accounts. “But we’ve never participated—we’ve never done that, and we never will. We don’t see the need to use fake profiles to trick people into signing up.”

The company measures its success by the number of arrangements it facilitates between the nearly 1.2 million sugar daddies overall and 2.2 million female sugar babies on its rosters in the U.S., said Bermudo. An average Sugar Daddy makes three arrangements a year, according to the company’s data.


Posted by:  The Trust Advisor



No Comments

Informa Investment Solutions Announces Partnership with HWA International to Provide PerformanceIQ Reporting Solution

 Strategic Partnership Provides Clients with Personalized Performance Reporting Solution

informa_logoInforma Investment Solutions announced today a strategic partnership with trust accounting software provider HWA International Inc. to provide the company’s PerformanceIQ performance reporting solution (formerly Investment Scorecard) as a third-party service for HWA clients who are seeking a more personalized solution. Merchants & Planters Bank is the first client to use PerformanceIQ® since the partnership formalized.

“We are thrilled that HWA has added PerformanceIQ as its premier performance reporting solution,” said Leno Toich, managing director at Informa Investment Solutions. “Our offering aligns perfectly with HWA’s software, helping their clients generate personalized reporting solutions for efficient portfolio management, trust operations, and client communications.”

PerformanceIQ provides a personalized, effective solution for institutional and private wealth advisory professionals which allows for a quick and easy way to analyze investment performance and search for top performers across multiple accounts and portfolios. Furthermore, the solution uses industry standard calculation methodologies; comparative analysis of indexes and benchmarks; and statistical analysis including absolute, target and relative measures to turn raw data into actionable intelligence.

“We view the partnership with Informa as a key step in offering more sophisticated performance reporting options to our clients,” said Donna Manley, vice president at HWA International. “Not only are the reports more detailed and graphical, our clients will be presenting independently calculated returns that have been reviewed by performance experts.”

“While the implementation process was completed earlier this summer, our team is excited about the product and have received positive feedback from our clients that have reviewed the reports,” said Nate Watson, senior vice president and trust officer at Merchants and Planters Bank. “We look forward to continuing to use PerformanceIQ and providing our clients with greater analysis.”

About Informa Investment Solutions

A market leader in intelligence and software solutions for financial institutions and investment professionals of all sizes, Informa Investment Solutions offers a robust set of analytics and tools to help you grow and retain your business. With a nearly 40-year history, Informa Investment Solutions is part of Informa PLC, a leading business-to-business knowledge provider serving international markets. For more information, please visit

About HWA International, Inc.

Founded in 1974, HWA International offers three customizable software products for foundations, banks, trust companies, family offices and other financial institutions. TrustNet (transaction-based trust accounting), TRUSTprocessor (general ledger-based trust and fund accounting), and TAMS (a smaller version of TrustNet) are licensable solutions for a full range of fiduciary operations. HWA is known for developing software that is feature-rich, reliable, flexible and fully customizable. Visit for more information.


Posted by:  Steven Maimes, The Trust Advisor


No Comments

Alan Harper Named President of Wealth Advisors Trust Company

National award winning trust company Wealth Advisors Trust Company ( has named Alan Harper as its new President in conjunction with the opening of its new office in Rapid City, South Dakota.

According to WATC co-founder and Director Christopher Holtby, “Hiring Alan has already set off shockwaves in the administrative trust community, as this move will be a game changer in our firm, in the administrative trust marketplace, and in the financial planning community as well.”

Alan has served as Vice President and Trust Officer for JPMorgan in Houston for over 14 years, later as Senior Trust Officer and eventually Executive Director for Santa Fe Trust Company.  Alan’s leadership, experience and expertise led Santa Fe to establish Independent Trust Company of America in Rapid City, SD where he has served as Executive Vice President since 2010.


Posted by:  Steven Maimes, The Trust Advisor

Permalink: ‎

No Comments

Brokers Upset About New Consumer Protection Laws

NY Times article by Tara Siegel Bernard

retirementbankA DOZEN or so new victims file into Joseph Peiffer’s law offices each month. 

There was the 51-year-old woman who worked at BellSouth, he recounted, who was told to invest her retirement money into nontradable real estate securities. He has also worked with retirees who were advised to put their I.R.A. savings into pricey variable annuities or other illiquid investments, when other options would have been far more appropriate.

 “It is really on the broker to do the right thing, because the typical investor doesn’t know enough to know if the broker and his firm have the investor’s interest at heart,” said Mr. Peiffer, a consumer lawyer in New Orleans who represents investors with cases against banks and brokerage firms.

Many brokers already do the right thing for their customers. But Mr. Peiffer said a new rule by the Labor Department that had been in development for five years would go a long way to help protect average investors from those who don’t. The proposal would require more financial professionals, including brokers, to put their customers’ interests ahead of their own when they are providing advice on how to invest in tax-advantaged retirement accounts, such as individual retirement accounts and401(k)-type plans.

“It should prevent the worst abuses that I have seen and, even if that means less cases, that’d be great as far as I’m concerned,” he said. “I’ve seen too many proud 65-year-old men break down in my office because they have to move in with their children.”

Under current standards, brokers only have to recommend suitable investments, a requirement that permits them, for example, to recommend a more expensive fund that pays a higher commission even when an identically performing, cheaper fund would have been the better choice.

But many in the brokerage and insurance industries, where conflicts of interest are often embedded in the way they do business, are upset over the plan. Some stakeholders are trying to slow the rule-making process, while others are trying to stop it with legislation.

The latest round of criticism was on display last week, when industry members testified before congressional subcommittees, and last month, during a four-day public hearing held by the Labor Department.

“The people who are rattling the sabers the loudest tend to get the most attention,” Thomas E. Perez, the secretary of labor, said in an interview. “But we have heard more frequently from industry stakeholders who understand and agree this is the wave of the future — an enforceable best-interest commitment.”

Mr. Perez vowed to introduce the rule, most likely in the first half of next year. People with retirement accounts, however, probably won’t see its full benefits until many months later because it will be slowly phased in.

Here’s how the rule could change things: Financial professionals working with retirement accounts would need to act in their customers’ best interest, and they would not be allowed to accept compensation or payments that create a conflict unless they qualify for an exemption that ensures the customer is protected.

Brokers will still be allowed to charge commissions and engage in a practice known as revenue sharing, where, for instance, a mutual fund company may share a slice of its revenue with the brokerage firm selling the fund. Companies that pay more may get a spot on the firm’s list of recommended funds.

But to accept that kind of compensation, brokers and others will be required to enter a contract with clients stating that they are putting the customer’s interests ahead of their own. They must also disclose any conflicts, try to mitigate them and maintain a website detailing how they are paid. They must also charge “reasonable” compensation and detail investors’ total costs in dollars.

“The rule’s biggest strength is that it fundamentally changes the way that retirement advisers will view their relationships with clients,” said Arthur Laby, a professor at Rutgers School of Law.“It sends a strong message that any behavior short of a fiduciary standard of conduct is unacceptable.”

The contract should provide individuals with more protections and better enable them to hold brokers accountable. Most of these disputes would be resolved in arbitration, not the courts, because nearly all investment firms require investors to settle issues that way. That said, customers cannot be required to sign away their rights to a class-action suit.

The concept isn’t entirely new. Investment advisers, who generally register with the S.E.C. or a state securities regulator, already are required to put their client’s interests first. They won’t be required to use the contract in most instances, because many charge transparent fees for their advice and their compensation is not tied to the recommendation of any products. But even these advisers will have heighted obligations when handling retirement money.

Brokerage and insurance industry players have many issues with the so-called best-interest contract, including when it should be presented when meeting with prospective customers. Secretary Perez and his team members say they are taking those comments under consideration.

Juli McNeely, president of the National Association of Insurance and Financial Advisors, whose members include insurance agents and brokers, runs a financial services firm in Spencer, Wis., where the average customer has about $71,000. She said she believed that the proposal was well intentioned, but that the rules appeared overly burdensome.

“The cost of compliance and liability we are facing would outweigh the revenue we get from small accounts,” she said.

But consumer advocates, academics and others challenge the broad-brush criticisms the industry continues to throw up, many of them laid out in the more than 2,700 comment letters filed on the issue. The Securities Industry and Financial Markets Association and several other trade groups, for instance, have complained that the rule is simply “unworkable.” More regulations will unleash more litigation, the groups say.

“You have this public message from the industry, ‘Oh, we are all for a best-interest standard,’” said Barbara Roper, director of investor protection at the Consumer Federation of America. “But then when you read what it is they are advocating, they are proposing changes that go to the heart of the very rule.”

Receiving conflicted advice can cost investors tens of thousands of dollars, if not more, over the course of their careers and retirement. It shaves about 1 percentage point a year from investors’ returns, or about $17 billion in total, according to Labor Department calculations.

Many Republicans in Congress have vowed to block the Labor Department, but the proposal is strongly supported by President Obama, who has promised to veto any stand-alone legislation that would try to kill the rule. That hasn’t stopped Representative Ann Wagner from trying. Ms. Wagner, a Republican from Missouri, where many brokerage firms opposing the rule are based, recently revived a bill passed by the House in 2013, which would require the Securities and Exchange Commission to pass a rule first. The commission hasn’t decided whether it will do that.

“In my view, the argument to delay, in some cases, is based on a hope that the S.E.C. will not act, or will adopt a rule that will weaken the applicable fiduciary standard,” Professor Laby said in his testimony before the Labor Department last month.

Alternatively, a rider could be attached to a spending bill that states the Labor Department is not permitted to spend any part of its budget on the rule. That could be more difficult for the president to veto, advocates say, if the possibility of a government shutdown were looming.

“That is a threat we are watching very closely,” said Marilyn Mohrman-Gillis, managing director of public policy for the Certified Financial Planner Board of Standards.

But a more likely course of action may be a lawsuit, which means it could be left to the courts to decide. “We know the opposition has already signaled they plan to file a lawsuit prohibiting the implementation of the rule on legal grounds, specifically the authority of the Department of Labor,” Ms. Mohrman-Gillis added.

For retirees like Deborah DePasquale, 64, the rules can’t come fast enough. After working with a broker for four years, she discovered that she and her spouse, Mary Guhin, were being charged what they said were exorbitant commissions, among other abusive practices.

“If average people like me were savvy enough to understand everything financial, we wouldn’t need to depend on brokers,” Ms. DePasquale said. “I should be able to trust them to act in my best interest — and not against me.”


Posted by:  The Trust Advisor



1 Comment